The Next Economic Paradigm

Tag: China

Engineers Are Money

Engineers are money.

China and India are producing millions of engineers as part of their global economic dominance strategy. Engineers increase productivity and productivity creates wealth. Why? Because money is only a means for storage and exchange of value and engineers create the value.

America has no idea who the engineers are

I heard an interesting comment on a group discussion board recently; “there are so many engineers on the streets that employers have their pick of the crop”.

First, I find the reference to “crops” ironic. Second, why should engineers need to fit every nuance of a job description? Engineers tell us the things that we don’t already know – who exactly writes those job descriptions if they know what they don’t know? Or in practical terms, why isn’t an Aerospace Engineer immediately qualified to be an Energy Engineer?

The Ingenesist Project identifies 3 types of knowledge assets: Social Capital refers to one’s ability to organize, perform, and manage themselves in teams of other people. Creative Capital refers to the ability to relate seemingly unrelated concepts, objects, and perceptions into new and innovative ideas. Intellectual capital refers to the ability to deploy book learning, objective reasoning, and tactical experience toward specific objectives.

Everyone has ALL of the above asset categories, however, we each posses them in different proportions. People like Steve Jobs have all of these in very high quantities, but the rest of us are somewhere in the middle. Most have a surplus in one or two at the expense of the remaining asset categories. Engineers typically enjoy a surplus of intellectual and creative capital at the expense of social capital.

Social Capital

Should we, as a society, expect engineers to meet meet the same social standards as say, Baristas? The job market favors the young, socially adept, and politically wired people. But engineers are a different – we all need them to be exactly the way they are in order for the rest of us to be who we are. If engineers were “marketers” they would either cease to be engineers or marketing would cease to be manipulative.

Who’s your money maker?

Engineers are responsible for nearly every penny of value stored and exchanged in a modern economy. Roads, infrastructure, medical devices, food production, software, hardware, housing, transportation – anything worth anything is in some way touched by God and an engineer. Engineers are responsible for creating the tangible value we enjoy so dearly but is also so easily corrupted by others.

Who is squandering whom?

So when I hear comments like; “there are so many engineers on the streets that employers have their pick of the crop”. I ask myself, “how exactly did that employer become an employer without engineers”? How does any employer expect to remain an employer without the direct, strategic, and honorable deployment of engineering assets? How does a country expect to arise from financial crisis and insurmountable debt obligation without elevating their engineers to “First-Responder” status?

I heard a story that Haiti is so poor, they would chop down a fruit tree for charcoal. Squandering engineers is like killing the golden goose. Every single engineer in America should be cherished. Every single engineer should have their pick of most qualified employers, not the other way around. Every single engineer should have a job waiting for them as soon as the prior one is finished. Engineers should be paid money, real money – not some “proxy” for money.

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Is Virtual Currency a Problem?

Editor’s note; The following analysis by Daniel Indiviglio from The Atlantic regarding a NYT article is foreboding of an unknown future.  Half insightful synthesis and half tongue-in-cheek, this article suggests that virtual currency may impact the current monetary system.  The conclusion is brilliant suggesting that the national debt could be paid in virtual currency.  It seems quaint now, but what would happen if the dollar fails?  During the Mexican Crisis, citizens emptied WalMart because today’s peso would be buy fewer Levies tomorrow – and it happened very fast. Get this and get it well: currency is a social agreement. People will trade what ever people agree to trade.

by Daniel Indiviglio

Is Virtual Currency A Real Problem?

All that time spent playing video games may finally be paying off. Literally. According to a fascinating New York Times article today, virtual currency — credits to buy stuff in video games — is being taken very seriously. China worries that make-believe video game money could affect its ability to control its money supply. As a result, it’s slapping limits on virtual currency. I’m not kidding.

From the NY Times:

Some people have even traded virtual currencies in China, and exchanged them for clothes, cosmetics and other goods. Last year, nearly $2 billion in virtual currency was traded in China, according to the China Internet Network Information Center. Some experts say they believe there is a much larger underground economy in the virtual world.

And it gets wackier:

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The Fertilizer Economy

The bad, the good, and the ugly

The bad news is that United States has a global comparative advantage in producing bullshit. The good news is that we may actually be able to till it into fertilizer for the Innovation economy.

America’s financial crisis was caused by money created from money which was in turn a derivative of wild-eyed speculation in assorted proxies for real productivity, including real estate.  Stock prices were supported by imperfect information in a Tickle-Me-Elmo culture while broker fees are embedded in every conceivable transaction.

America has become a world leader in hype, marketing, lawsuits, and fantasy. None of these industries actually produce anything yet nobody can say they are not immensely creative, induce sweeping social movements, and their propagation demands extraordinary intellectual resources, flexibility, and adaptability.

The Theory of Comparative Advantage

It is not efficient for, say, Ghana to produce rice and Vietnam to produce cocoa. If they each produce their natural endowments and then trade the differences, fewer resources are expended to produce more goods.  This theory is the basis of global free trade and the efficiencies are irrefutable so globalization is here to stay.

Meanwhile, the literature on the subject of innovation agrees that innovation is maximized as a function of endowments in social capital, creative capital and intellectual capital.  Silicon Valley is widely held as the poster child for emerging from the deep social movements of the 1960’s attracting an inflow of diverse people where high tolerance, creative art and music were abundant in close proximity to intellectual centers of Stanford and Berkeley.

Comparative Advantage for Innovation:

By the theory of comparative advantage, if a country does not possess a comparative advantage in intellectual capital, creative capital, and social capital, they would not hold a comparative advantage in an innovation economy.

For example; China has a huge endowment of intellectual capital and throughout history they have been an inspired creative force.  However, the current government thwarts social capital.  Therefore, whereas China has a comparative advantage in a manufacturing economy, they would not necessarily have a comparative advantage in an innovation economy.

Many other countries have endowments of intellectual capital as well as democratic governments, but cultural norms may still constrain diversity related to gender roles, social classes, lifestyle tolerance, or the acceptance of “outsiders”.  As such, they may have comparative advantage in a knowledge economy, but the relative deficiency in creative capital would inhibit a comparative advantage in an innovation economy just as quickly.

The Fertilizer Economy:

That said, the United States has a vast abundance and tremendous economies of scale in social capital, intellectual capital, and creative capital in comparison to any other country in the world.  The problem is that these assets are sequestered behind the corporate veil, suppressed from true wealth creation by the priorities of a financial system built to produce nothing except analyst expectations.  Like sugar calories, lots of energy is delivered, but sustainable health is not.

The harvest in the wind

The brokers, speculators, and marketers are not bad people – in fact, they are brilliant.  They are simply stuck with the wrong set of incentives.  The Ingenesist Project dramatically changes the incentives and promises a far better allocation of intellectual capital, social capital, and creative capital.  By making such assets tangible outside the construct of the Wall Street, the comparative advantage of the United States in an innovation economy will be astonishing.

Where there is fertilizer in the wind, Wall Street will lead. Where there is a harvest in the wind, Wall Street will follow.

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